30 cure the state's budget problems? and will the growing economy take the state out of danger? a new approach to ridding california of air pollution, it's called cap and trade and it's under legal attack. an assessment of how it work or it doesn't. techies say the election was won or lost in the digital realm. but not everyone agrees. and an in-depth look at the fight over public nudity in san francisco. coming up next.

good evening. i'm spencer michaels. welcome to this week in northern california. joining me tonight, marisa lagos, san francisco chronicle, city hall reporter. hari sreenivasan, senior correspondent for the pbs news hour. lauren sommer, science and environment reporter. and josh richman, bay area news group political reporter. josh, let's start with you. all of a sudden it seems like california, which was in the depths, is now rolling in money. and there's more taxes, we've passed proposition 30. i can't believe there's that much of a turn-around. is there? >> well, there is a turn-around. i wouldn't say we're rolling in money. i've never seen a state so happy to a $1.9 billion deficit over

the next year and a half. that's basically where we're at. now, you have to look at that deficit, even though it's the size of wyoming's entire budget, in the context of a $42 billion deficit and $6 billion deficit, we've worn it down over time. with the passage of prop 30 last week, we have money coming in for the next several years to support education, k-12 education, college education and also to help out balancing out some of the mope that's needed by counties for the realignment of the criminal justice system. >> do you think prop 30 was the main reason that the deficit is lower? or is it the fact that the economy's improving, and there's more taxes? >> well, i think the lao's estimate of a $1.9 billion deficit, legislative analyst, the estimate of that $1.9 billion deficit through june of '14 would have been higher if we hadn't passed prop 30 last week.

that said, there are still things the state needs to do, and the governor is out there aggressively telling people to be very careful over the next few years. we have democratic super majorities in both houses of the legislature right now. there's a department tatemptati everything that happened. >> but is anybody saying, let's spend our money? >> i think the interest groups are lining up. i think in the out years, yes, it's the recovering economy and the taxes that are going to help. in the short term, it's really the fact they've made these deep cuts to social services, to medical services -- >> education. >> education, yes, although education, at least it's whole now. the programs, and the welfare they cut in the past years, they aren't getting any more money out of the tax hikes. those are the people that the governor and democratic leaders are going to have to be spending off. i think it's going to be hard for them. >> it is going to be hard.

>> what are the big problems that remain. i read several articles this week that said, you know, don't take this too seriously, there are lots of problems in california. >> sure. >> and they mentioned pensions as the main -- >> pensions is definitely one of them. something's going to need to be done sooner rather than later with the california teachers' funds. it's got serious unfunded liabilities. it really extends all over the budget. the governor was out there aggressively telling the uc and csu systems this week, the public universities, to be very careful. they're both asking for more money in the budgets that they've just passed than they got last year. and he's telling them that they have to find ways to continue to cut costs, so as not to have to raise student fees. students are very adamant about that as well. >> are we going to see a lot of attention there? because they were out campaigning for prop 30 a lot and they're certainly looking to get that money to come back to them. >> and it's not that the money may not come back to them.

it's that they shouldn't be planning on wine and roses for every year going forward. that there has to be a very studied approach to that, while we're dealing with things like pensions, and restoration of services. >> they were talking about increasing tuitions right after prop 30 passed. >> but this is a problem with the budgeting, you have to sell people on something that's not exactly what it seems. what prop 30 did is give extra money to schools that they can offset what was otherwise to the schools. it didn't give the universities extra money, it stopped them from being cut more this year. >> right. >> so that's, i think, you know, all you hear on the campaign trail is, oh, this is about schools, about higher education. it is, but it's not about them suddenly getting buckets full of money. >> but it was about other things, too. prop 30. it wasn't just about schools and higher education. it was about reducing the debt and a bunch of things. >> it was predominantly about

not having to make the $6 billion in the automatic trigger cuts which was built into the budget that we're already in right now. >> right. >> and so that will not come to pass. we'll not see a shortening of the school year. we'll not see an instant wholesale raising of fees. >> it also gave locals the guarantee that they're going to keep getting the money for realignment. the governor's criminal justice reform, which sends a lot of responsibility for inmates and parolees back to the counties. that's in the constitution now. legislature cannot touch that. that's big. because that would have been a huge hit locally. talk about pensions, i mean, that's -- those are the bigger problems coming to a head in the next decades are the local obligations on this thing. >> i'm also wondering whether prop 30 took the pressure off in trying to make the deep reforms. and -- >> well, i think we've made some very significant deep reforms in the sense that the structural budget deficit that we've had in

recent years is essentially gone at this point going forward. we're looking at this $1.9 billion deficit through june 2014, and projected surpluses for some years after that. this budget is a lot smaller now. a lot smaller than it was when this crisis began several years ago. >> it's still based on a recovery. >> something of a recovery. and frankly, some of the new figures are very positive. there are new job figures out today in california that showed good job numbers for this month. amended, better numbers for last month. driven by companies in the bay area. so there is some path forward it looks like at this point. >> so we're going to move to another political subject, kind of. but first, we're going to tell everybody that dan lundgren conceded defeat today, by the way, in his race with omi bareff in the sacramento area. probably the end of a career for

a guy that's been in politics for a very long time. let's talk about cap and trade. this week marked the beginning of an auction for cap and trade. and lauren sommer, tell us what that's about. it's a mystery to a lot of people. >> it sounds kind of wonky. but what it is, it's the most aggressive climate change policy in the country. this goes back to six years ago when governor arnold schwarzenegger passed the landmark global warming law in the state. it has a huge goal which is to cut the greenhouse gas emissions 30% by 2020. >> why don't we give schwarzenegger the credit for that? he didn't pass it. the legislature. >> we'll give him that credit. but it's a huge feat. there's a number of programs, but it started with cap and trade. it applies to oil refineries, manufacturers, food processors. >> polluters. so you brought some props with you. >> i brought some props. >> we're going to show how cap

and trade works. so let's bring out the props. and try to figure out, how do you cut pollution in a state where there's a lot of industry, and a lot of oil refineries, and cement companies. what have you got here? >> first of all, let's start with the cap part of cap and trade. this is an overall limit on the greenhouse gases that can be emitted in this state. over the years it's going to drop a little bit. that's how they're getting the cuts. the trading part, we're going to do a little demo. you guys are going to help me, right? let's say since you are going to be an oil refinery, you are a power plant. you both emit greenhouse gases, all right? >> all right. >> and since you're both businesses we're going to give you a little bit of money here. we've got monopoly money. >> you gave him more. >> so now under cap and trade you're going to need carbon permits. what they call allowances. basically each of these poker chips is going to be one ton of carbon.

after a certain number of years, you're going to need to have enough of these to cover every ton of greenhouse gases that you emit. and so at the beginning at least, the state is going to give you almost all of your allowances for free. >> okay. >> here's your allowances. >> fantastic. >> so with each one of these, i can emit a ton of carbon. >> that's your carbon right there. >> what if i don't want to really clean up my plant? >> that's one of the options is you can invest a little bit early on, upgrade your technology, so hypothetically you would be emitting fewer greenhouse gases. >> i'm going to spend 500 bucks and improve my plant. okay? >> that means you probably won't need this entire stack of poker chips. you may have a few extras now because you cut your emission sgls so i'm not going to use four poker chips. but he's going to keep polluting, right? >> i'm going to try to buy some of those credits off you. let me offer you 300 bucks. >> i want more. i want 500. >> 350.

>> 400. >> all right, 400. >> this is exactly what we're going to see, right? no one's really sure what the price of carbon is going to be. it's going to be a market. >> and how is that going to reduce the -- why don't we just say, don't pollute anymore. instead of all those poker chips. >> the idea of cap and trade is to give businesses flexibility. you had choices. it will be cheaper for some companies to cut than others. incentivize it in the market. >> what's the role of the state in it? it sounds like the state is trying to sell these things here. >> yeah. mostly they'll go for free, then there will be auctions where companies will have to buy allowances on the open market. that money, it's going to raise billions of dollars. and that money's going to go towards energy efficiency and it's going to go towards helping homeowne homeowners, rate payers. >> why doesn't the state say stop polluting instead of

selling you permission to pollute? >> the cap will come down. the overall greenhouse gases emissions will come down. they don't care where the cuts come from. some companies will pollute more than others. >> so the auction isn't legal? what was it? >> yes, they were challenging the state's right to collect revenue from selling allowances. they're not against the cap and not against the trading is what they say, it's the state making money from it. >> so couldn't that be where maybe we see the two-thirds less play of the majority in sacramento? couldn't they say, fine, it's not a fee, it's a tax? then the money could go to anything? >> it's a lot of money. it certainly is. billions of dollars, you know, over the years. some of it is ledgislated already. some are already impacted by pollution. some of it will have to be spent there. >> when you say it's billions of dollars, what do you mean it's billions of dollars? >> that the state will actually be collecting from the sale of these allowances? >> they'll make that much money?

>> most of it will go toward clean energy, energy efficiency programs. then it's going to go -- some of it will actually help reduce electricity rates for homeowners. >> do the companies that can't stop polluting go out of business? >> talking to different sides they have different opinions about this. it's really a revolutionary thing, to put a price on carbon. that's kind of the whole idea behind it, to make businesses field their bottom line. i think it's safe to say there will be winners and losers. the state said, we want to see clean energy grow in the state. >> you say it's revolutionary. but it's been done in europe, right? >> they have a very large carbon trading scheme. some people say it's been very successful. it has had some problems. california is saying they've learned from that and they're going to design this market to be more efficient. >> okay. well, it's a complicated system and we'll talk about another complicated system here. hari sreenivasan. there's a lot of new information

about how the digital world helped in the last campaign. and maybe made a big difference. >> right. >> you've been looking into that. >> you know, what's interesting is this is the first time the campaigns had access to not just all of the 500 points of consumer data about you that already exist, this time they were able to combine it with all of your online surfing behavior and really start to microtarget. both campaigns, neither campaign really wanted to talk about it until after the election. we're getting dribs and drabs of information on exactly what they've built in their store houses. >> you produced a report for the news hour and for frontline about this. and we're going to see a little bit of that right now. >> the ability to predict voter behavior is what makes all of this data so powerful. once the campaigns collect all of this seemingly random information about us, they feed it into sophisticated mathematical formulas called algorithms, which are used to predict voter behavior. the more information fed into these models, the better a

campaign can predict what issues particular voters might care about. or what type of ads they would be most receptive to. for example, an ohio male registered democrat who votes primaries owns a shotgun, visits the "wall street journal" website, might swing republican and be susceptible to ads about gun control. or a florida female who's registered independent, with children under 18 years old, and is a pet owner mainly democrat and could be susceptible to ads about education issues. >> cool graphics. interesting report. who used this technique? >> both campaigns used this pretty aggressively. the obama campaign probably more so, because they had a head start. they knew who their candidate was going to be and they've been working on this for years. >> is it all legal? i mean, how do they -- >> it's interesting they mention that, it's so much of the

information we generate today. we're opting to share that on facebook and all the social networks. we leave this huge digital trail online. in a way we might not do in the offline world. >> basically you're only targeting or finding out about people on facebook and twitter and in the social media. and the old folks, or on the other side of the digital divide, we don't know much about them. >> no, i think those folks are still targeted the old-fashioned way. publishers clearinghouse sold you down the river a long time ago. so they've built profiles on us. now they're just actually targeting us even more. >> it seems like everybody talks a lot about social media and how does that influence voter behavior, but this really seems like this is where the money's at for campaigns. my facebook page is probably made up of people sort of like me. and you're kind of preaching to the choir in a way. this lets them come in and

really target individual people in this household. >> in fact, you can have two people in the same house see different kinds of advertising. that was never possible with tv. you'd have to buy 50 tv ads and you never knew -- >> do they see it on the computers? >> if you're online and you've created a digital profile of yourself, they're going to target that profile, like we split those two things out and say, i just want to reach this person. there is a massive facebook effect. in the last election, facebook was able to turn out an extra 340,000 people to the polls. this time facebook figured out one in five people responded and reacted to a plea from one of their friends to go out and -- >> i was going to say, it's a very viral effect, because not only are they targeting voters, but they're targeting the people to contact other people. california may not be in play in the presidential election, but they'll have you call your

cousin in ohio to get them to vote. >> but there are some people who don't completely buy this theory. mike at harvard's kennedy school of government doesn't believe any digital outlet had any noticeable effect on the course of the election. instead, they fostered superficial dialogue, he says. the politicians got a little internet buzz for their appearances. the tech companies got some cheap marketing. and with a few exceptions the political reporters who covered the election campaign went mer ily along for the right. he's doubting what -- >> no, that's fantastic. i'm glad he does. i really think that he can't really argue with the efficiency of the amount of television advertising. for example, the obama campaign actually sat there and figured out which persuadable voters to get and what types of ads to run in which markets for efficiently. they can measure that and say i spent my dollars, 14% better than if i had these tracking tools. he can't argue there are twice

as many people on the social media between 2008 and 2012. two-thirds of those people on twitter actively asked their friends to take some sort of political action. those facts are indisputable. ultimately you can't ever measure whether your voter or your target and pulled the lever exactly the way you wanted them to. >> it was getting the information in the field volunteers. they were collecting information. >> absolutely. so, you know, i had both the obama and romney apps on my phone. it was amazing the volume of information that i had literally, if i wanted to go and canvas for a democrat, i could sit there and know first name, last initial, age, knock on their door and there would be a little script, hello, spencer m. and then the script might have been tailored based on other information that chicago speak had on you. >> this seems like, again, not that different from what we've done in the past, using different technology. so i still get the mailers at my house that are targeting me because of how i'm -- what

district i'm in, how i'm registered, what they know about me. like you said, what we're subscribing to, other things. they just have more information. >> there was a great "new york times" magazine article saying they knew you were pregnant before you did. >> we have a huge new market. >> it's scary, isn't it? i don't know if this sounds so good. >> it depends on -- but also i think more information is better in the sense if you're aware this is happening, perhaps you can take a couple of steps to do something about it. know that you're a pawn in somebody else's chess game. that is different than saying, i don't really think i'm being targeted. you are. about 900,000 people decided this election, about 12 to 15 counties around the country. that's where $1 billion each was spent. >> so you were targeted. >> i was targeted. >> we weren't in this area. >> i'm a registered independent in the state of virginia. so i had a -- >> you didn't tell us that. we already knew. okay. all right. from the sublime, we'll talk

about nudity. >> we'll go very local. >> marisa lagos of the "san francisco chronicle" has a big issue about knunudity in san francisco. why is that an issue? >> the issue is here. it isn't only in san francisco, it's the way it plays out, only in san francisco. in the last few years, we've had this sort of increase of mostly men hanging out in the castro district, the historically gay district. literally hanging out. they're just sitting in a public square naked. and you know, in california, nudity, as long as it's not lewd or obscene, is technically legal. but it's generally been taken to mean that you can't really be nude unless you're, say, at a beach or somewhere where it's sort of tailored. and last year, the board of supervisors here passed a law saying, fine, you can be nude but you can't do it in a restaurant and you've got to put something between your buttocks

and a seat before you do it. that didn't seem to help. there's been a lot of outcry. on tuesday the board will consider legislation to ban nudity. if you're under the age of 5, at parades or fairs. it would only include waist down nudity. >> so the display, the -- >> exactly. because -- >> the protests occurred in front of the federal building. what's going on here. >> there were protests against this legislation, a group of nudists marched from city hall to the federal building across the street challenging this law. but it's not a law yet. basically what's going to happen is the board is going to have to pass this. it wouldn't go into effect probably until january. and then potentially it could be put on hold by a federal -- >> this is not a case that really has a real strong legal precedent, right? >> the supreme court's decided at least twice that nudity on its own is not a form will

protest. it's free speech. that's what they're essentially arguing. so i think that the real debate, you know, it could be a fun day at the board of supervisors on tuesday. we will continue to see this play out. but it doesn't seem like the lawsuit itself is -- >> there are some people who are really upset about this issue, i think. >> there's about ten of them. i mean, there might be more people. there is a vocal group of supporters. >> if you walk down castro street, or any other street and you see a bunch of people hanging out with no clothes on, you might be shocked if you weren't expecting it. >> right. there are some people that argue it's actually drawing tourists to the castro. i think it speaks to the changing demographic of the gay, you know, not just neighborhoods, but wult tur in this town. a lot of people, it's not just a place people go to party. there are a lot of families. a lot of the opposition to this has come from the gay community saying, we're walking our kids to school. they don't need to see this. business owners i think in the

area have kind of mixed feelings. >> so why did the thing all come up all of a sudden? a lot more people walking around naked? >> yes. i think that's really -- it seems -- you know, three to five years ago it was limited to the parades and the full some street events where people kind of showed up to do this. and suddenly we just -- >> is this a response to the sort of restriction on restaurants, where they -- >> no, the restriction on restaurants came after this movement. i think honestly, we've seen these sort of come up in the city, areas taken back to become an open space. and i'm pretty sure that one or two people just started doing it, and it attracted other people. >> even berkeley. >> san jose. >> you're from washington. you're out here on a little trip. what do you think of this? is this only in san francisco? >> quite possibly. it's too cold in washington. but it's also interesting to see

the edges of the frame of this conversation are so far to the left, that the screaming conservatives are the ones that want to restrict it to just be specific cases. >> let's be clear here, it's expected to be a close vote at the board. i talked to the author, and he thinks it will be a 5-6 vote. the argument being the sort of argument around the split bylaws, it's not necessary. there are ways to -- things on the books that they can use already. but i think that comes down to the liberal town and people not wanting to tell their people what to do. >> do you think this is a progressive issue? >> i would say -- i don't know. >> that's why i asked it. >> i think the progressive will be squarely against this. >> this is a fascinating thing. we will find out what happens. anyway, that's all for tonight. i want to thank all of you for being with us. it's been a lot of fun. so come back again and visit

kqed.org for this show's archives. to subscribe and share your thoughts. we're off next week for the thanksgiving holiday. if you don't want turkey, you can enjoy dungeoness crab, because they're in. i'm spencer michaels. thanks for watching. good night.